It also says police radios deployed on the day did not work underground, a problem that was first identified in the 1987 King's Cross fire.

The report makes 16 recommendations for change, and says the Met has already begun acting upon them.

It also reveals that investigators had asked the Crown Prosecution Service (CPS) to look at possible charges against the two officers who shot Mr de Menezes, and the commander on the day, Cressida Dick. The CPS decided not to bring charges against the individuals.

The IPCC said the Met had to rethink policies around deploying firearms officers and critical language governing the manner in which they stopped a suspect.

Mr Hardwick said the IPCC's investigators believed that Sir Ian Blair played a key role in delaying their work.

"The commissioner attempted to prevent us carrying out an investigation. In my view much of the avoidable difficulty of the Stockwell incident has caused the Met Police arose from the delay in referral [to the IPCC]."

Deborah Glass, one of the IPCC commissioners, said the "lack of clarity" over language used by firearms officers and their superiors to sanction the shooting had to be resolved for future operations.

She said armed officers in high pressure situations had to know for sure what their commanders expected of them and in the case of Stockwell this had not happened.

'Deep regret'

Sir Ian Blair said in a statement that he intended to remain in his post.

The Met Police had been in possession of the report for 18 months and many of the recommendations in the report were already being acted on, he added.

Sir Ian said he had "deep and very personal regret" over the death of Mr de Menezes.

He added: "The MPS has never sought to avoid accountability for the death of Jean Charles de Menezes. We killed an innocent man.

"Hardly a day goes by when I have not thought about how things could have been done differently and thus Mr de Menezes would still have been alive."

He added that his decision to exclude IPCC investigators from the scene of the shooting after it took place was made "with the best of motives" but acknowledged that "I would not make the same decision again in similar circumstances".

Home Secretary Jacqui Smith said that the Met had already made significant progress implementing the report's recommendations, and insisted that Sir Ian retained her "full confidence".

But Shadow Home Secretary David Davis repeated his call for the commissioner to resign.

He said: "This report confirms clear, systemic failings in the operation leading up to the events on 22 July, 2005.

"Because of this, along with the need to restore public confidence and improve public safety, Sir Ian Blair's position remains untenable."

In a statement, the Metropolitan Police Authority said it would recommend to the IPCC that no disciplinary action should be taken against Ms Dick or Assistant Commissioner Andy Hayman - the UK's most senior counter terrorist-officer - over the shooting.

The family of Mr de Menezes welcomed the report but said they had not achieved justice as no individual had been held accountable for his death.

Their solicitor, Harriet Wistrich, said they would take the case to the European Court for Human Rights.

Mr de Menezes' cousin Patricia da Silva said: "Officers have to be held accountable individually. The police have to stop with this arrogant attitude they have been taking so far."